Bessent in Heated Hearing: “Can’t Bail Out Bitcoin” Amid Scrutiny of Trump-Linked World Liberty

U.S. Treasury Secretary Scott Bessent faced intense Democratic scrutiny in a House hearing, firmly stating he lacks the authority to “bail out Bitcoin” or direct banks to buy crypto.

The hearing erupted into sharp exchanges over World Liberty Financial, a Trump-family-linked crypto venture that received a major investment from the UAE, raising conflict-of-interest and national security concerns. This contentious session underscores the deepening political divide over cryptocurrency regulation and the challenges of navigating digital asset policy amidst close personal ties to the White House.

A Contentious Hearing: Clashes Over Crypto and Conflicts

The House Financial Services Committee hearing on February 5th, 2026, intended to focus on the Treasury’s Financial Stability Oversight Council (FSOC), quickly devolved into one of the most heated public debates over cryptocurrency and political ethics in recent memory. Treasury Secretary Scott Bessent, who leads the FSOC, found himself squarely in the crosshairs of Democratic lawmakers. The questions were pointed, the exchanges were loud, and the underlying tension was palpable, revealing a profound political rift over the role of digital assets in the American financial system and the appropriate distance between a president’s policies and his family’s business ventures.

At the heart of the conflict was a fundamental disagreement on regulatory philosophy. In his opening remarks, Bessent criticized the previous administration’s approach as “regulation by reflex,” arguing that over-regulation could lead to a “zero-risk financial system” with the “stability of the graveyard.” He advocated for a framework where the FSOC identifies systemic vulnerabilities and encourages the private sector to mitigate risks before imposing new rules. Democrats, however, viewed this stance as a deregulatory green light for risky crypto ventures, particularly those with connections to President Trump. This philosophical clash set the stage for the personal and pointed questioning that followed, transforming a financial oversight discussion into a politically charged interrogation.

The drama was not confined to crypto. Lawmakers also pressed Bessent on inflation, housing affordability, and the independence of the Federal Reserve. Bessent’s combative responses, at times talking over representatives like Maxine Waters (D-Calif.), further fueled the hearing’s tense atmosphere. When asked to be the “voice of reason” on affordability, Bessent deflected, citing studies that linked immigration to housing cost increases—a response that only intensified the confrontation. This broader context is crucial, as it shows how cryptocurrency has become woven into larger political and economic battles in Washington.

The “Bitcoin Bailout” Question: Clarifying Treasury’s Limited Role

One of the most revealing—and somewhat surreal—moments of the hearing came when Rep. Brad Sherman (D-Calif.), a long-time crypto skeptic, directly asked Secretary Bessent if he possessed the authority to orchestrate a government “bail out” of Bitcoin. Sherman’s line of questioning, framed in deliberately provocative terms, sought to test the boundaries of the Treasury’s powers and highlight perceived risks in the administration’s pro-crypto posture. “Can you instruct the banks of this country to… bail out Bitcoin?” Sherman asked, later adding, “is [taxpayer money] going to be deployed into crypto assets?”

Bessent’s response was unequivocal and clear. “I am Secretary of the Treasury, I do not have the authority to do that, and as chair of FSOC, I do not have that authority,” he stated. This definitive answer served to dispel a fringe but persistent market speculation about direct government price support for cryptocurrencies. More importantly, it publicly delineated the limits of the Treasury’s mandate, reinforcing that its role is regulatory and enforcement-oriented, not that of a market participant or investor of taxpayer funds in speculative assets.

The discussion naturally turned to the existing U.S. Bitcoin Strategic Reserve, established by a Trump executive order in March 2025. Bessent clarified the nature of this reserve, explaining that it is funded solely with bitcoin seized through criminal and civil asset forfeiture proceedings, not through market purchases. He provided a striking data point: of approximately $1 billion in seized bitcoin, $500 million was retained, and that amount has since ballooned in value to over $15 billion. This disclosure highlighted a passive, though massively profitable, government holding strategy, distinct from any active “bailout” or market intervention. Bessent also firmly shut down any notion of developing a U.S. Central Bank Digital Currency (CBDC), answering “Absolutely not” when asked about Fed or government efforts to create one.

Key Takeaways from the Bitcoin Exchange

• No Rescue Power: The Treasury Secretary explicitly confirmed he lacks the legal authority to direct banks to support Bitcoin’s price or use taxpayer funds to buy crypto.
• Strategic Reserve Explained: The government’s bitcoin holdings are from seizures, not purchases, and are held, not actively traded.
• CBDC Stance: The administration currently has no plans to develop a U.S. digital dollar, aligning with pro-crypto, anti-surveillance sentiments.
• Political Theater: The questioning served as political messaging to critique the administration’s overall crypto-friendly stance.

World Liberty Financial: The Core of the Controversy

While the “Bitcoin bailout” line made headlines, the most substantive and explosive part of the hearing centered on World Liberty Financial (WLF), a decentralized finance (DeFi) and crypto venture. Rep. Gregory Meeks (D-N.Y.) launched a sharp critique, focusing on a recent** **Wall Street Journal report that an investment vehicle backed by Emirati Sheikh Tahnoon bin Zayed Al Nahyan had secretly acquired a 49% stake in WLF for $500 million just days before Trump’s inauguration. Meeks framed this as a glaring conflict of interest and a potential national security issue, noting that the president’s family is actively involved in the company while he conducts foreign policy with the UAE.

Meeks demanded that Bessent commit to a full investigation into these “conflicts of interest and foreign influence” and to pause any related bank charter applications at the Office of the Comptroller of the Currency (OCC). Bessent’s response—that the “OCC is an independent entity”—was perceived as evasive by Meeks. The exchange escalated into a shouting match, culminating in Meeks telling Bessent to “stop covering for the president” and to “stop being his flunky.” This moment crystallized the Democratic argument: that the Trump administration is unwilling to apply normal ethical and regulatory scrutiny to ventures personally connected to the First Family.

What is World Liberty Financial?

World Liberty Financial is a crypto and DeFi project co-founded by President Trump (as co-founder emeritus) and his special envoy, Steve Witkoff. It is managed by members of the Trump and Witkoff families. The company is currently seeking a federal bank charter from the OCC, which would grant it significant regulatory advantages and legitimacy. The controversy stems from the opaque, high-value foreign investment and concerns that policy decisions favorable to the UAE could be linked to this private business deal. President Trump, when asked about the investment, claimed no knowledge, stating his family handled those matters.

Political and Market Implications: Crypto at a Crossroads

The fiery hearing is more than just political theater; it signals a critical inflection point for cryptocurrency in America. The event underscores that digital asset policy is now inextricably linked to partisan politics. Democratic lawmakers are framing their oversight as a fight against corruption and financial risk, while the Trump administration and its allies view their approach as fostering innovation and rejecting overreach. This deep polarization means that clear, stable, and bipartisan crypto legislation remains elusive, replaced by a state of constant political skirmishing.

For the crypto market, the immediate takeaway is regulatory uncertainty with a side of political risk. While Bessent’s statements removed the phantom fear of a “bailout,” they did nothing to clarify the regulatory path forward for the broader industry. The intense focus on World Liberty Financial could lead to heightened scrutiny for all crypto projects seeking banking partnerships or charters, as regulators may wish to avoid the appearance of favoritism. Furthermore, the association of high-profile crypto ventures with political controversy may dampen institutional adoption, as traditional finance is typically risk-averse to political scandal.

Looking ahead, the controversy guarantees that cryptocurrency will remain a hot-button issue through the 2026 midterm elections and beyond. Hearings like this one are likely to become more common, with every significant market movement or venture failure potentially triggering congressional inquiry. For investors and builders in the space, navigating this environment requires not just technical and business acumen, but also careful attention to the shifting winds of political sentiment in Washington. The era of crypto operating in a regulatory gray area is giving way to an era where it operates in a political spotlight.